If we were to judge by the budget, we could easily conclude that dawn has truly arrived. Three consecutive quarters of growth (0.2 percent in the last quarter of 2014, 0.5 percent in the first, and 1.2 percent in the second quarter of 2015) provide sufficient evidence of recovery for the government ahead of the elections, allowing for an immediate budget revision with figures that are rising – upwards!
The government hastily corrected its growth projections for this year from 0.5 to 1.1 percent. Because, they say, for the first time since the beginning of the recession, all components of GDP are growing, so budget revenues and expenditures can also rise, by no less than two billion kuna (while the deficit will remain the same, around 3.8 percent of GDP).
But have we really left the bottom from which we have been statistically stagnating for seven to eight years (realistically, we have been doing this for all 25 years), or are we merely standing on a glass floor that threatens to shatter? In fact, what are the ten biggest challenges to sustainable growth?
1. parliamentary elections
2. the Swiss franc case (consequently: legal uncertainty, lower investments, rising interest rates on loans across all sectors)
3. rising interest rates on state refinancing in the international market
4. public debt at 85 percent
5. over-indebtedness of all sectors
6. excessively high taxes on labor (income tax, contributions) and consumption (VAT)
7. parafiscal levies (holding growth potential of at least one percentage point)
8. regulatory and administrative barriers
9. absence of direct foreign investments
10. absence of public sector reforms
More on this topic can be read in the latest issue of the weekly Lider.
